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In accordance with the order of the Financial Supervisory Commission, Date of issuance:
26 November 2014, Ref.No.1030045436.
The Operation of Futures Introducing Broker Business by Securities Firms who operate their authorized business should follow the article 5 of the Futures Trading Act：
The futures trading that a futures commission merchant may be mandated to engage in shall be confined to those futures categories and at those exchanges as announced by the Competent Authority.
Futures introducing broker can help open an account to be used for trading in foreign futures. A trader who intends to trade in foreign futures could personally handle account opening procedures at a futures introducing brokerage.

• In accordance with guidelines for pre-account opening procedures by futures commission merchants outside their place of business and guidelines for pre-account opening procedures by FCM-appointed introducing brokers outside of the place of business, An FCM assigning personnel to the location of a principal to conduct pre-account opening procedures at the request.
• The term "pre-account opening procedures conducted outside the place of business" as used in these Guidelines mean pre-account opening procedures that an FCM conducts, as necessary for business purposes, with a principal by sending its personnel to the location of the principal at the request of the principal.
• An FCM /IB may assign personnel to conduct pre-account opening procedures at the location of a principal, the FCM/IB shall retain the relevant application records. The application submitted by the principal shall include the date of application, the principal's name, date of birth, ID number, household registration address, correspondence address (or, if a juristic person, the principal's name, address, business administration number), time of account opening, the principal's location, and contact telephone number.
• An FCM/IB shall set up a website or telephone hotline for a principal to verify the identity of its associated persons. An associated person conducting the aforementioned pre-account opening procedures shall wear his/her work permit prepared and issued by the Chinese National Futures Association, and an employee ID, and may not refuse to answer a principal’s inquiries about the associated person's identity. When an FCM/IB assigns personnel to conduct pre-account opening procedures, the procedures may be conducted jointly at the principal's location by a staff member responsible for account opening and the associated person responsible for brokerage trading business; or the procedures may be conducted by a staff member responsible for account opening at the principal's location, together with the associated person responsible for brokerage trading business at the FCM's place of business, by means of a simultaneous video link ; or the procedures may be conducted by having the principal issue a written statement agreeing that the FCM may use electronic means to explain the contract content, futures trading procedures, and risk disclosures, and having the staff member responsible for account opening conduct the operations related to identity verification outside of the place of business.
• The location of the premises, and time of the visit, at which FCM/IB personnel conduct pre-account opening procedures with a principal should be one that suitably allows for explanation of the contract content, futures trading procedures, risk disclosure, and the verification and confirmation of such principal’s identity and basic personal information.

These requirements are set out in Point 3 of the "guidelines for the handling by futures brokerages of margins and premiums deposited by futures traders" . The purpose of the requirements is to be sure that the account name on the futures trader's bank passbook matches the account name of his/her futures trading account, and that it was furnished in person by the futures trader, so that FCMs can better identify the source of funds.

The following types of remedy are available to futures trader who gets into a civil dispute with an FCM:

• The parties can agree to arbitration. For more information, contact the Arbitration Association of the Republic of China (Floor 14, 376 Renai Road, Section 4, Taipei; Tel: +886 (2) 2707-8672).
• Apply to the Chinese National Futures Association for dispute mediation (12F, No. 27, Anhe Road Section 1, Taipei; Tel: +886 (2) 8773-7303).
• File a complaint with the Securities and Futures Investors Protection Center (12F., No.178, Sec. 3,Mincyuan E. Rd., Taipei; Tel: +886 (2) 27128899).
• Apply to the Financial Ombudsman Institution for ombudsman service (17F., No.4, Sec. 1, Zhongxiao W. Rd., Zhongzheng Dist., Taipei; Tel: +886 (2) 2316-1288).
• File a civil suit with the court of jurisdiction.

• Article 39 of the "regulations governing futures commission merchants" provides as follows: "A futures commission merchant accepting futures trading brokerage orders shall produce a trade confirmation statement report after completion of the trade and deliver the same to the futures trader for his/her signature or seal."
• In accordance with operation directions governing the sending of trade reports and reconciliation statements, and the cancellation of accounts by futures commission merchants.An FCM may, on the last day of each fiscal year, inspect the accounts of futures traders that meet all of the following conditions, and send the reconciliation statement for December of the current fiscal year to that futures trader via registered mail with return receipt before the fifth day of the first month of the following fiscal year; it may be temporarily exempted from sending the reconciliation statements for the remaining months of the following year:
  (1)No trades were conducted in the most recent year, and there are no open positions, in any of the futures trader's trading accounts.
  (2)There were no changes to the margin or premiums in the most recent fiscal year in any of the futures trader's trading accounts.
  (3)The total balance of margin and premiums in all of the futures trader's trading accounts is NT$10,000 or less.
• An FCM may, on the last day of each fiscal year, inspect the accounts of futures traders that meet all of the following conditions, and send the reconciliation statement for December of the current year to that futures trader via registered mail with return receipt before the fifth day of the first month of the following fiscal year. Thereafter, the FCM is temporarily exempted from sending reconciliation statements:
  (1)No trades were conducted in the most recent three fiscal years, and there are no open positions, in any of the futures trader's trading accounts.
  (2)There were no changes to the margin or premiums in the most recent three fiscal years in any of the futures trader's trading accounts.
  (3)The total balance of margins and premiums in all of the futures trader's trading accounts is NT$10,000 or less.

• ANC stands for "adjusted net capital", a dynamic capital concept. It is a key indicator that enables up-to-date measurement of the overall risk of FCMs. Its principal function is to reflect the risk-bearing capacity of FCMs and spur them to run their businesses in a safe and sound manner by paying attention to capital maintenance even as they seek to maximize profits. The final objective is to bolster investor confidence and safeguard their interests.
• ANC ratio = Aggregate Margin required on Open Position
• Monitoring and control of ANC:
  (1) According to Article 72 of the Futures Trading Act and Article 22 of the Regulations Governing Futures Commission Merchants, when the adjusted net capital of an FCM is lower than 20% of the total amount of customer margins required for the open positions of futures traders, the futures commission merchant must immediately report to the FSC and FSC-designated institutions, and when adjusted net capital is less than 15% of the total amount of customer margins required for the open positions of futures traders, except where necessary in order to deal with currently outstanding positions, the FCM must immediately cease accepting orders from futures traders and submit a rectification plan to the FSC and FSC-designated institutions. The purpose of these requirements is to ensure that FCMs have enough capital to deal with potential risks.
  (2) According to the Article 19-1 of the Operating Rules of TAIFEX, the adjusted net capital of FCMs must not be less than 6 percent of the total amount of customer margin accounts.
• Generally speaking, the higher an FCM's ANC ratio is, the more business it can undertake and the more risk it can assume.

FCMs report their ANC ratios and other financial information to TAIFEX. The information is published on or about the 15th of the following month on the TAIFEX website (www.taifex.com.tw). Traders can access the information by visiting our website and clicking on Member Information > Financial Information of FCMs > FCMs Financial Statement

FCM personnel must satisfy the qualification requirements set out in the "Regulations Governing Responsible Persons and Associated Persons of Futures Commission Merchants," and they must also register with the Chinese National Futures Association. (See Articles 3 to 8 of said Regulations.)

You can open an account with an FCM or a securities firm (i.e. I.B.). There is a list of FCMs on the TAIFEX website; click on Trading > Register of FCMs, IBs, and Others.

On the TAIFEX website, click on Trading > Register of FCMs, IBs, and Others > Register of FCMs. A futures firm not on this list could very possibly be illegitimate. Caution is advised.

Before trading TAIEX Futures, a trader must first post margin as set by the FCM (TAIFEX has basic requirements regarding margins).